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Green groups say renewables industry 'stitched up' by RET report

ELIZABETH JACKSON: The Federal Government says it wants to spend the next month or so listening to the discussion within the Australian community about the renewable energy target (RET).

Today the message it's receiving from the renewable energy industry is loud and clear - they believe their industry has a bleak future if the Government adopts recommendations contained in the review led by businessman Dick Warburton.

Green groups say the sector has been "stitched-up" with a report conducted by a well-known sceptics of man-made climate change.

Nick Grimm reports.

NICK GRIMM: Supporters of Australia's renewable energy target are incredulous. They say it's proved its value on all its key indicators.

It's cut pollution, it's encouraged investment in cleaner, greener, renewable energy, it's created jobs, and it will help bring power prices down.

TIM FLANNERY: Well, the fact is that the renewables are making the wholesale price of energy cheaper.

NICK GRIMM: In fact, Professor Tim Flannery from the Climate Council is so aghast at the recommendations of the review of the renewable energy target, he has no hesitation suggesting that the fix was in all along when the Federal Government appointed the committee that carried out the report.

TIM FLANNERY: Yes, I'm not surprised. Some of the people who've served in the review panel are notorious for their pro-fossil fuel interests.

NICK GRIMM: Committee chairman Dick Warburton is a prominent Australian businessman and a former chairman of the petroleum refiner, Caltex.

He's also on record as a climate change sceptic - something he insists had no bearing on his work on the RET.

Tim Flannery is also taking aim at another member of the review, former ABARE (Australian Bureau of Agricultural and Resource Economics) boss, Brian Fisher.

TIM FLANNERY: Well, Brian Fisher for example suggested some years back that it would be more cost effective to the let the Pacific Islands sink under a rising sea than for Australia to move away from its coal-based energy generation system.

NICK GRIMM: But Dick Warburton says his review has simply crunched the numbers and for the renewable energy target they simply don't add up.

While it's achieved its objectives, and then some, it's costing the nation billions of dollars in cross-subsidies.

And, as he explained to Fran Kelly on RN breakfast this morning, it's a high-cost approach towards achieving a modest level of reductions in greenhouse gas emissions at a time when Australia is producing more energy than it needs.

DICK WARBURTON: What has happened is that there's been such a significant oversupply in excess of the demand that you've got the law of supply and demand coming into effect and thus you do get a reduction in wholesale prices but that's due to the oversupply situation.

FRAN KELLY: But that works for the consumers in the short term, doesn't it?

DICK WARBURTON: It does in the short term but it's a very expensive way of buying assistance for the consumers, very expensive way.

NICK GRIMM: The Energy Supply Association of Australia says the RET has become unworkable as a result of the falling demand for electricity.

When it was first established it was expected that energy demand would only increase. The association's Matthew Warren speaking here to the ABC's Lateline.

MATTHEW WARREN: Because renewables are pushing in so much new supply into a market that's oversupplied and the market is not functioning in a way where you'd expect it to kind of clear and balance, so we're suppressing this wholesale price, and while this is used as an argument to support renewables, it's destroying the environment which we need to put more renewables in.

So it's institutionalised dysfunction.

KOBAD BHAVNAGRI: It's now becoming a victim of its own success.

NICK GRIMM: Kobad Bhavnagri is an industry analyst with Bloomberg New Energy.

KOBAD BHAVNAGRI: The renewables are really disrupting the energy market and they are reducing income and they're reducing the profits for existing generators, mainly coal-fired power stations, and that's responsible for a lot of the backlash from the market.

NICK GRIMM: Dick Warburton's report recommends winding back the RET by closing the scheme to new companies involved in large projects.

He also suggests scrapping subsidies for household solar panels and water heaters.

DICK WARBURTON: Well, I think for one thing it's an extreme exaggeration of a situation. As you will see in our report, we believe that if those recommendations are followed, it's likely that the manufacturer of the solar energy generators will decrease by possible 30 per cent but then start to increase again.

NICK GRIMM: And renewable energy providers like Pacific Hydro say the mooted changes to the target will result in higher energy prices for consumers over the long term, and increase greenhouse gas emissions.

A spokesman for the company, Andrew Richards, says it will also see investment head overseas.

ANDREW RICHARDS: Either of the options they've put up really don't encourage long term investment in renewable energy in the country, so that's something that we need to, I guess, talk to the Government about and continue to work with them to try and get a better outcome for our industry.